GOLD Price Analysis – April 30, 2024
Daily Price Outlook
Gold price (XAU/USD) was unable to prolong its previous day's upward rally and turned bearish around the $2,312.22 level, hitting an intraday low of $2,311.55. However, the downward rally was driven by multiple factors including a bullish US dollar and risk-on market sentiment, which undermined the safe-haven gold price as investors preferred to invest in riskier assets due to upbeat market sentiment. Meanwhile, the bullish US dollar, backed by the growing acceptance that the Federal Reserve (Fed) will keep rates higher for longer, was seen as another key factor that kept the gold price lower.
Impact of US Dollar Strength and Fed Expectations on Gold Prices
On the US front, the broad-based US dollar regained its traction, bouncing back from a two-week low amid expectations that the Federal Reserve will maintain higher interest rates due to persistent inflation. Moving on, the upcoming US Nonfarm Payrolls report is expected to provide insights into the Federal Reserve's future interest rate decisions. This could impact the demand for the US dollar and influence the short-term direction of gold prices.
Furthermore, the release of the US Personal Consumption Expenditures (PCE) Price Index highlighted ongoing inflation concerns, reinforcing expectations that the Fed may delay rate cuts until September. The Federal Reserve's upcoming policy announcement, along with the jobs data released on Friday, will provide clues about their future decisions on monetary policy.
Investors will also keep an eye on Tuesday's US economic indicators, including the Chicago PMI and the Consumer Confidence Index, for further market cues.
Impact of Easing Middle East Tensions on Gold Prices
On the geopolitical front, the easing tensions in the Middle East, particularly between Iran and Israel, are leading to a shift in investor sentiment away from safe-haven assets like gold. However, the recent optimism surrounding peace talks between Israel and Hamas in Cairo, coupled with diminishing fears of further escalation, is bolstering global risk sentiment.
Therefore, the easing tensions in the Middle East and improving geopolitical stability are causing investors to move away from safe-haven assets like gold, leading to an increase in selling pressure and a downward impact on gold prices.
GOLD (XAU/USD) - Technical Analysis
On April 30, gold prices settled at $2,329.48, marking a decline of 0.40%. This adjustment places gold just below the pivotal $2,345 mark, suggesting a tepid sentiment among traders as they navigate through various macroeconomic indicators and market dynamics.
The metal faces immediate resistance at $2,361, with further barriers at $2,383 and $2,403. Should gold manage a breakout above these levels, it could signal renewed investor confidence, potentially driven by macroeconomic uncertainties or shifts in the investment climate. Conversely, the support levels are set at $2,314, $2,291, and $2,268. A breach below these could indicate increasing bearish pressure, possibly influenced by a stronger U.S. dollar or rising real yields.
The 50-Day Exponential Moving Average (EMA) at $2,344 nearly coincides with the current pivot point, underscoring a crucial technical juncture. The Relative Strength Index (RSI) stands at 46, hinting at a lack of strong momentum in either direction but leaning towards bearish territory.
Trading Strategy:
- Given the current technical setup, the strategy would involve a cautious approach:
- Entry Price: Consider initiating a sell position if gold falls below $2,335.
- Take Profit: Set the profit target at $2,314 to capitalize on potential downward moves.
- Stop Loss: Place a stop loss at $2,350 to manage risk effectively.
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